Sept. 27 (Bloomberg) -- Canada’s dollar snapped a three-day losing streak versus its U.S. counterpart as investors’ risk appetite grew with Spain’s cabinet approving a budget it said would ease the nation’s debt crisis.
The Canadian currency rose with stocks as Spanish Economy Minister Luis de Guindos said the plan exceeds the recommendations of the European Union. The so-called loonie gained as crude oil, the nation’s largest export, increased on speculation the Chinese government will do more to support its economy. A report due tomorrow is forecast to show Canada’s gross domestic product grew 0.1 percent in July, down from 0.2 percent in June.
“The market decided this was a good thing for Spain,” said Steve Butler, director of foreign-exchange trading in Toronto at Bank of Nova Scotia’s Scotia Capital unit. “The market decided that it may not be a bad thing if they can avoid going to the EU for money.”
The loonie, as the Canadian currency is known for the image of the aquatic bird on the C$1 coin, gained 0.5 percent to 98.06 cents per U.S. dollar at 5 p.m. in Toronto. It touched 98.60 yesterday, the weakest since Sept. 6. One Canadian dollar buys $1.0199.
The advance extended the Canadian dollar’s monthly gain to 0.5 percent and its quarterly climb to 3.5 percent.
Canadian bonds fell after eight straight days of gains, matching the longest streak since an 11-day rally ending May 26, 2003, with the yield on the benchmark 10-year security rising as much as one basis point, or 0.01 percentage point, to 1.76percent. The 2.75 bond maturing in June 2022 fell 11 cents to C$108.83.
Canada will add an extra auction of 10-year and 30-year bonds by the end of March to take advantage of interest rates at almost record lows.
The size of the bond auctions may also be increased depending on market conditions, the Bank of Canada, which handles debt-market operations for the federal government, said on its website today. Offers to buy 30-year bonds back from investors for cash will be halted until end of the fiscal year, the central bank said.
The euro rose from a two-week low as Spanish Prime Minister Mariano Rajoy’s cabinet approved a new tax on lottery winnings and a cut in ministries’ spending to shrink the region’s third-biggest budget deficit. The 2013 target is 4.5 percent of gross domestic product compared with a 6.3 percent goal for this year.
“If euro can claw its way over $1.29, we may see a little extension below 98 for dollar-Canada,” said Scotia Capital’s Butler. The euro climbed 0.3 percent to 1.29.
U.S. stocks advanced, snapping a five-day decline for the Standard & Poor’s 500 Index, as American jobless claims last week fell less than forecast. The gauge gained 1 percent.
Crude-oil futures rose from an eight-week low, adding 2.6 percent to $92.32 in New York after rising as much as 2.7 percent, as a report showed China’s industrial profits fell for a fifth month, increasing speculation the government will add stimulus to spur growth.
“We’re seeing a rebound in risk appetite,” Eimear Daly, a currency-market analyst at Monex Europe Ltd. in London, said in a phone interview.
Canada’s dollar has strengthened 1.5 percent this year against nine developed-nation currencies tracked by Bloomberg Correlation-Weighted Currency Indexes. The greenback has dropped 2.9 percent, with the yen tumbling 3.9 percent to lead decliners. The New Zealand dollar’s 4.6 percent rise leads gainers.
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